10 important points before signing an Agreement to Sale

10 important points before signing an Agreement to Sale

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important points before signing an Agreement to Sale
important points before signing an Agreement to Sale

A sale is an agreement by which one of the contracting parties, called the seller, gives a thing and passes the title to it, in exchange for a certain price in current money, to the other party, who is called the buyer or purchaser, who, on his part, agrees to pay such price. But what is an agreement to sale?


An agreement to sell is a legally binding contract that clarifies the terms of a transaction. It constitutes the terms and conditions of the sale of a property by the seller to the buyer. These terms and conditions include the amount at which it is to be sold and the future date of full payment. Also known as a sales contract or a sales agreement.

This type of document generally involves two parties — the buyer is an individual or organization making a purchase, while the seller is an individual or organization selling the item in question.

Section 54

Transfer of Property Act, 1882 (TP Act) clearly defines a particular sale as an ownership transfer of immovable property for consideration. For constituting a valid sale agreement, all the critical components of a sale agreement as mentioned below are to be fulfilled: 

  1. The property is the subject matter of the conveyance/transaction. 
  2. The seller, being the earlier owner, transfers the property. 
  3. The buyer is the individual who acquires the title from the property’s seller. 
  4. The consideration is the amount paid or payable by the buyer to the seller. Such amount may either be paid fully or promised to be paid in due course or partly paid and partly to be paid eventually. 
  5. The act of transferring the ownership of the property from the seller to the buyer. 

Difference between the agreement of sale and sale deed

  1. An agreement to sell is a guarantee or readiness to transfer the rights in the property to another person. Whereas, the Sale deed is a document showing the actual transfer of ownership rights.
  2. An agreement to sell involves the terms and conditions on which the sale/purchase will be transacted. While, a sale deed involves detailed information about the parties, the property, the amount of consideration, whether paid or not and more.
  3. An agreement to sell shows a future transfer, while a sale deed signifies the immediate effect of the transfer.
  4. Rights and obligations remain with the seller in case of mere agreement to sell, whereas in the scenario of a sale deed, the rights and liabilities are transferred to the buyer instantly.
  5. An agreement to sell needs not to be executed by stamp duty, unlike a sale deed. The buyer has to pay a certain amount of stamp duty for the transfer to be registered.
  6. An agreement to sell is a mere understanding between the parties. While the sale deed requires witnesses to be present before the registrar at the time of registration of the deed.

For example, a sale agreement is like an engagement between 2 individuals whereas a sale deed is like a marriage that happens after engagement and is final and legally binding.

Who can draft an Agreement of Sale?

The terms of the Contract Act will govern all the Agreements to Sale. Also, mandate that the seller and buyer are competent for entering into the contract. Both the seller and buyer should – 

  • have attained the age of majority that is they are above 18 years of age.
  • should be of sound mind.
  • Are not prohibited under any judgment or law of a court for entering into the contract.
  • Have not been declared as an insolvent.
  • Both the parties must give their free consent.

10 important before signing sale agreement

  1. Name of parties: The agreement should contain all the details of the Buyer and the Seller. Like their name, father’s name, residence address, place, etc.

Tip: when you are entering the name of the parties, you should also mention the information of their identity proof in the brackets after place. This will help in removing any future complexities occurring in the identification of seller and buyer.

  • Definition: Define all the elements of the property i.e. Carpet area etc. To make it easy mention that the RERA laws apply to the said agreement.
  • Possession details: It is important to mention in the agreement that the seller has all the rights. Also, he is in possession of the property which is to be sold.
  • Details of property: Measurements of the property i.e. Carpet area, built-up area, super built-up area, etc. should be mentioned.

Tip: make a map of the property and annex with the agreement and mention all the details of the property in the agreement.

  • Channel documents: In this those documents are included which states that from where the seller has acquired the property which is to be sold.
  • Terms of payment: It states how the payment is made,in advance, or is due to be paid.

Tip: pay advance through cheque or RTGS and mention the details in the agreement. This will help if the seller refuses to acknowledge the payment made.

  • Time limit: It includes the time taken to transfer the property from seller to buyer and a penalty clause should also be included in it in case the seller arbitrarily delays the transfer.
  • Encumbrance certificate: this certificate should be attached with the agreement, it states that the property is free from any mortgage, loan or any other liability.
  • Signature: both parties should sign on every page of the agreement.
  • Registration certificate: though the registry is not important, the parties can get it printed on a stamp paper of Rs. 500 or Rs. 1000 (as per the state rules) and it should also contain the signatures of at least two witnesses and the identity proof of the witnesses should be annexed with the agreement.

Follow Simple steps to draft an agreement for sale even without the help of a lawyer.

Tip: when the agreement is notarized request the notary to add the photographs of both the parties in the notary register for future references.

What to do in case of fraud?

There are two remedies available in case of fraud:

  • Civil Remedy: the aggrieved party can file a civil suit under Specific Relief Act, 1963 in the civil court of competent jurisdiction.
  • Criminal Remedy: the aggrieved party can file an F.I.R. under Section 406 & 420 of I.P.C. . It can be stated that the seller has induced the buyer into buying the property and took advance money.

Which remedy to be availed first?

  • There are two limitations of civil remedy. First, the aggrieved has to pay the court fees and the process takes time. Secondly, the limitation period to file a civil suit, in this case, is of three years.

We advise that an aggrieved party should first file an F.I.R. in the nearest Police Station as no expense is incurred in this . If no relief is provided then the aggrieved party can move to file a civil suit.

If doubts still persist, contact our Legal Experts at


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